By JONATHAN BERR, who has written for national media outlets for more than 15 years.
Pittsburgh-based PNC Financial Services Group, the sixth-largest U.S. bank, has named Joseph Guyaux, its former president and head of retail banking as its newest Chief Risk Officer. The promotion for Guyaux comes as the bank prepares to integrate its $3.62 billion acquisition of RBC Bank USA from the Royal Bank of Canada
Guyaux, 61, replaces Enrico Dallavecchia, who went on administrative leave in December after he and five other former Fannie Mae and Freddie Mac executives were sued by the SEC for allegedly misleading investors about risks related to subprime loans. Dallavecchia was the former chief risk officer at Fannie Mae and was not accused of wrongdoing in connection with his work at PNC.
The RBC deal, PNC's largest acquisition since it bought National City in 2008, will add 420 branches in the South, where the company does not have a large presence. PNC expects the deal to close March 2.
Despite the taint of the accusations against Dallavecchia, analysts said that PNC has a reputation for being conservatively managed.
"They have actually performed very well during the economic downturn," said Marty Mosby, an analyst with Guggenheim Securities LLC in Nashville. "In order for them to grow as fast as they want to, they need to be leading edge as far as risk management."
Regulators might not be stringent in terms of the amount of capital they could require PNC to raise if they determine that its risk management practices are considered top-rate, said Mosby, who rates PNC's stock as a "buy." Capital One learned this lesson the hard way when the government forced it to improve its risk management practices after its $9 billion acquisition of ING Direct USA.
Under a Federal Reserve proposal, U.S. bank holding companies with assets of $50 billion or more, would be required to develop annual capital plans, conduct stress tests and maintain adequate capital, including a tier-one common risk-based capital ratio greater than 5 percent, under both expected and stressed conditions. The proposal gives risk managers a chance to demonstrate their expertise to regulators, Moby said.
"They are going to build out their expertise as much as possible" in risk management, Mosby said.
PNC spokesman Fred Solomon said Guyaux was not available for an interview. The company said it is not replacing him as president.
"His experience and leadership will now be used in a broader role that will benefit the entire organization and help us inspire trust and confidence among those we serve," according to a memo CEO James Rohr sent to PNC employees last week.
February 27, 2012
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